Capitalist Corner

November 30, 2007

YDNFWWPH

I'm hesitant to say too much on this issue lest I cannibalize a forthcoming article on a related subject, but I thinkfolks are overlooking the political merits of the individual mandate. I'm quite open to the idea that the best electoral move is to mention the principle and refuse to define its enforcement (though I also think politicians should be rewarded for being truthful), but setting it against an actual government enrollment program, where everyone is simply signed up through taxes, sort of misses the point.

You can take a lot of lessons from 1994, but the most important political teaching was that You Do. Not. Fuck. With. What. People. Have. If Americans are concerned about health insurance, it's because they may someday lose theirs. If you guarantee that they will lose their insurance -- even en route to a better, stronger, more comprehensive system -- they will reject your plan. Status quo bias is an inescapable fact when you're talking medical coverage. And that's what you run afoul of when you centralize enrollment. What people have now is employer-based insurance paid for through premiums. They can't keep that if you're moving to a government-based system paid for through taxes. What the individual mandate does is try and square that circle: If you like what your employer is giving you, write down the premium # on this form, and we'll never bother you again. If you don't, we're signing you up for a program. Building on the current system isn't necessarily the best policy, but in a country where 80-some percent are pleased with their current insurance, it's the only viable politics.

As for concerns about enforcability, and the evils of the IRS, we're going to have to face those down one way or the other. A big political selling point of the individual mandate is that it's still based on premium payments that are transferred, privately, to insurers. It does not transmogrify the billions we're currently privately into a lump "tax increase." Such increases are much harder to sell. As Rep. Pete Stark recently told me, "[The 1994 reforms] failed because the democratic caucus in the House couldnt deal with the tax. A majority of the Democratic caucus couldn’t support anything with a tax in it." As Chairman of the House Health Subcommittee and a career supporter of Medicare-for-All, I take that judgment seriously.

The individual mandate will still face hurdles as we argue over enforcement, but it basically trades away certain amount of economic efficiency in order to evade the political implications of nationalizing health spending. Figuring out how to enforce it -- which will really only take a modified version of Obama's language, that it's not as if people don't want health care -- is an easier sell than trillions in "new" taxes. And the idea that these plans will automatically enroll individuals in health care should, for liberals, be an exciting prospect, one they're enthusiastic about advocating for. How you enforce this on the tiny remnant who refuse to pay their premiums is a really weird place to focus, and applies as much to Obama with his mandate-4-kidz as it does to Edwards and Clinton.

Comments

Drum and others criticisms that this is a political loser are very right. This may be less of a political loser than a single-payer approach, but its still a loser.

Which is exactly why I'm very perplexed with the vociferous pushback on Obama's idea. His approach to mandates isn't a political loser-- and will very transparently lead to mandates in the future-- in a politically acceptable way (stop free-riding from those who wait to get insurance until after they are sick).

Obama deserves the criticism for arguing disingenuously in the debates on this point-- which was your initial point and one I haven't seen anywhere else written nearly as well. The rest of this pushback is really coming from a ideological purity standpoint and is misdirected.

You can take a lot of lessons from 1994, but the most important political teaching was that You Do. Not. Fuck. With. What. People. Have.<.i>

but you state it too strongly. It isn't necessarily the most important lesson, because we only have one data point to analyze.

Other potentially more important lessons?

1. The process is as important as the substance
2. Hillary is the wrong person to be the face of health care reform and having the right person matters.

What's my real point? The Wyden plan would change "what people have" today-- in a good way, its gets them out of the situation of the job being linked to their health care. I think its very possible that this is a political winner, albeit one that does require folks to take a leap of faith for something they want (full control over their health care plan).

Posted by: wisewon | Nov 30, 2007 9:17:41 AM

Petey,

This is real nuanced, but important. People will get health care from Obama's plan. What they won't have is health care coverage prospectively.

As long as Obama's plan has community rating, then everyone has full access to health care. If you're not covered and get sick, then you'll sign up for a plan and get health care. There are no pre-condition exclusions and you pay the same rate as everyone else under Obama's plan.

Is this sustainable in the long-run? Definitely not. Is this feasible from an actuarial standpoint in the short-run? Yes. Which is my point, allowing for these "free-riders" will have a small impact on insurance rates/actuarial planning in the short-run so that issue is improperly stated by Ezra, Krugman and others. In the long-run, these free-riders make madates a political winner, as the electorate will not be happy with an inevitably increasing number of free-riders in the system.

Posted by: wisewon | Nov 30, 2007 9:23:30 AM

to add to the last line there: "that threaten to undermine the whole insurance system."

Posted by: wisewon | Nov 30, 2007 9:24:43 AM

My problem with mandates is a simple one. Speaking here as someone who has been desperately short on money myself and who knows a lot of folks who still are: requiring any significant chunk of cash up front is an excellent way to discourage some of the people who most need whatever the service is. Poor and disabled folks have experience with such things. It doesn't matter how much you tell them side things like "oh, but there's help available if you need it" - if they see that the thing starts off with a big payment, they're going to expect that it's not for them, and with some justification. Big fees are one of the traditional ways to make something nominally but not actually available to wrong sorts of clientele, like those in actual need.

Let's take a practical case, my friend Gary Farber. Please feel free to go read his blog and explain just how a mandate scheme like Edwards' is anything but a powerful disincentive for him to avoid all government contact before he racks up more bills he simply can't pay. And there are many, many people in that kind of situation who happen not to be as articulate as Gary.

My experience of services fees is that they're a way to push aside people at the bottom of the ladder. "Oh, sure, in theory this is available to all...but not really." Mandates for health care strike me as a sop to America's ghastly moralistic tradition. If health care is in fact something we regard as a right, then mandates make no sense. Mandates make sense only if we're treating it as an optional luxury or charity and don't mind scaring people off. It's hard enough to find that (for instance) you can't challenge a traffic or parking ticket without paying a nonrefundable court fee higher than the ticket's cost, or that you can't get access to some government record without a fee that represents days of labor at low wages. If every contact with government agencies means getting forcibly enrolled in a system that will immediately start generating costs that you can't pay and will get you in the sights of collection agencies...the underclass is going to swell, a lot.

This is awful, if the goal is helping those at the bottom.

Posted by: Bruce Baugh | Nov 30, 2007 9:24:49 AM

STOP ITALICS.

Posted by: Christmas | Nov 30, 2007 9:25:15 AM

Well, that was pointless.

Posted by: Christmas | Nov 30, 2007 9:25:44 AM

Oh, and because "so what's your alternative?" often comes up at this point, and because it's actually a reasonable question a lot of the time: I propose simply funding health care via taxes. People who aren't making enough to pay a big tax bill get coverage anyway. People who can afford to pay more do. The financial load is therefore lightest on those at the bottom - those who can afford least should see least intimidation in the form of billing, whether it's called a mandate or anything else.

Posted by: Bruce Baugh | Nov 30, 2007 9:34:16 AM

Over half those currently uninsured are either eligibile for Medicaid and SCHIP and have not enrolled or make over 50K and thus could in most cases afford insurance. Yet you still claim people wan't insurance they just can't afford it. There are no facts to support that, over 20 million people have access to free or affordable insurance and CHOOSE not to take it.

What I'd really like to see is a piece that reviews how collection agencies now operate, including the lies they routinely tell their targets about targets' burdens and agencies' powers, and puts that together with any vision of health care. I'd like to see candidates who propose mandates required to account for these abuses and what they propose to do to make such agencies less threatening and abusive in the future. It is no exaggeration to say that collection agencies are one of the great blights on the lives of the needy - it's not quite like saying that health care is available to all who don't mind a little cross burning on their lawn, but it's much more like that than saying that health care enrollment calls for the equivalent of one more visit to the DMV. They're bad news, and I would really like to see the problems they make treated as a necessary issue in health care via mandate.

Posted by: Bruce Baugh | Nov 30, 2007 9:48:16 AM

They can't keep that if you're moving to a government-based system paid for through taxes.

This seems to be a very common misapprehension among US commentators. In fact in Britain (for example), private health insurance is a huge business and is more often than not offered as a perk to executives by their company. At the lower end the country is awash with cheaper schemes which are designed to pay for upgrades to basic health care and for the not inconsiderable charges that the Health Service makes for e.g. drugs and dentistry. These too are often provided by employers. Private insurance in Britain supplements the NHS, and has never been discouraged.

I suspect that the idea that they are in some sense counterposed is a piece of misinformation which is deliberately circulated by opponents of single payer care in Americ

Posted by: chris y | Nov 30, 2007 9:53:47 AM

What people have now is employer-based insurance paid for through premiums. They can't keep that if you're moving to a government-based system paid for through taxes.

Why not? What happens to 65-year-olds who work full time? If their employers want to pay for their health insurance, the existence of Medicare doesn't fuck with that. Does it?

One final note before I slouch off for a while and see about coddling my addled sleep cycle: Ezra, I hope I'm not coming on unpleasantly. I should identify my biases. I am severely disabled, and receive SSI, and like a lot of gimps and feebs (to use the technical term :)) know others in the same kind of boat. If you care to hash out the matter on the side, please do feel free to drop me e-mail ( bbaugh @ mac.com , in case you're not in a position to scoop it out of Typepad info). I am more interested in seeing the potential for abuses with a mandate system identified and addressed than I am in simply having a rant, and would be glad to discuss it however it might be most useful.

Posted by: Bruce Baugh | Nov 30, 2007 10:21:04 AM

If you don't sign up for Medicare when you become eligible at 65, no matter the reason, then for each year you delay you are hit with a 10% premium increase per year. That premium is not a one time charge but hits your premium for as long as you live.

Now what was that about Medicare not interfering with your employer paid coverage again?

Since the IRS is used now to collect payments for Medicare, it would seem that it could also be used to pay for the lower cost public plan, in Clinton and Edwards implementations, for all those who don't purchase private insurance. In other words, if you can't show proof of insurance the IRS collects via payroll taxes the public premium.

Posted by: RalphB | Nov 30, 2007 10:24:49 AM

Absolutely misguided. Here's how you sell single-payer.

"The government will give you free health care coverage, paid for by general taxation.

If the government plan doesn't cover something important to you, but your existing private plan covers it -- well, you do keep your existing private insurance; we don't do anything to it. It still covers the same things it always did. Your premiums will probably go down, though, because the government will be paying for a lot of care, so you have to make fewer insurance claims."

Single-payer done right doesn't fuck with what people already have, and neither does Medicare. You have to pay taxes for the general health care system, but dammit, you still *have* your existing health insurance.

Convincing people that having government coverage is an *improvement* worth paying taxes for is another matter. But everyone who's uninsured, underinsured, has crap insurance, or pays exorbitant premiums will back it immediately.

Posted by: Nathanael Nerode | Nov 30, 2007 10:59:35 AM

Nate O, parroting right-wing distortions:

"Over half those currently uninsured are either eligibile for Medicaid...."

Medicaid requires, as a condition of enrollment, that you become destitute: that you blow pretty much *all* your savings. This is pretty damnable and disgusting. I can see a lot of good reasons not to enroll in Medicaid if you can possibly avoid it.

Health care via Medicaid is an absolute last resort, only for those who are willing to sacrifice all control over their own money. For eternity, since Medicaid can claim assets from your *estate* after you die, such as your house (which is otherwise exempt).

Plus, the paperwork for Medicaid is fantastically complicated, mostly due to bogus "fraud prevention" schemes which cost more than they save. Local governments have to hire people just to navigate the bureaucracy. It's an incredibly demeaning program. Thank you Republicans for that.

Medicaid is now, essentially, the insurer for the completely bankrupt.

"and SCHIP"
Which is a lot more tolerable, a much more reasonable program.

"and have not enrolled or make over 50K and thus could in most cases afford insurance."

With insurance running over $10,000/yr in some states (NY), and housing costs running around $30,000/yr in some cities (NYC), "could afford insurance" is probably true, provided they chose to skimp a lot on little things like food, clothing, and shelter.

"Yet you still claim people want insurance they just can't afford it."

Because it's true. Unless by "afford it" you mean "are willing to sacrifice all other considerations whatsoever for it", in which case, yes, almost everyone can "afford" insurance by living in a ditch on the street (housing is so expensive!).

Posted by: Nathanael Nerode | Nov 30, 2007 11:13:31 AM

And you want to be *really* radical? Fund the universal health care program by *cutting the military budget*, which is bloated beyond all reason. Then you don't even have to raise taxes.

Of course, nobody in Washington can say anything against the almighty military budget.

Posted by: Nathanael Nerode | Nov 30, 2007 11:17:05 AM

What do these plans do with mandates (Hillary’s and Edwards’) do with the HSA concept? To me the amounts that one can have in a HSA are much to small to be effective for cost control. Mandates should be popular with those who have insurance because they often see the people who opt to not have coverage as a burden on people with coverage but Mandates could lead to more unnecessary usage and coverage and thus more spending. Very large HSAs might help to keep spending down. One of the goals of medical insuarnce reform should be to reduce overall spending on medical care.

Posted by: Floccina | Nov 30, 2007 11:18:46 AM

OK, here's a even crazier proposal.

Announce that everyone in the country is now, officially, a member of the military from birth. (But not with any actual obligations.)

At this point the VA system covers everyone -- as part of the *military* budget, which nobody seems to have trouble dumping truckloads of cash into.

Posted by: Nathanael Nerode | Nov 30, 2007 11:19:06 AM

80% of the population are happy with their health coverage ???

Posted by: David | Nov 30, 2007 11:24:00 AM

You. Do. Not. Fuck. With. What. People. Have.

Ummm ... a mandate would fuck with what people have. Some people do not have health insurance. And note Nate O.'s very clever use of statistics (he must be a pro) -- over half of people without insurance qualify for Medicaid or make over 50K a year? That means as many as 49.9999% of people without insurance neither qualify for Medicaid but make less than 50K a year.

That is, if they live in any place where the cost of living is higher than it is in West Bumblefuck (and that includes even places as out-of-the-way as Talla-fucking-hassee), forcing them to pay for health insurance is fucking with something they already have: whether it's the ability to take a vacation and relax enough that they don't keel over at 43 from the stress, whether it's the ability to not pile up too many folks in your apartment or whatever, you are taking away something that someone already has.

The argument is "well, how is this different than raising taxes". And nu? raising taxes isn't political suicide since when? And mind you it's very regressive -- these mandates are gonna hit those who cannot afford health care (otherwise they would have made the "rational choice" and purchased it) even if some bureaucrat says they can (and if the ruling is that they cannot, watch for the same stink to be made about people with money getting free handouts just like has been made with SCHIP ... note the stinks about taking into account the cost of living in NY and the issue with the kid ... the whole point of SCHIP is so that his family wouldn't have to sell their livelihoods to get health care for their kid like they would for Medicaid).

My question is why don't we just have increased federal spending for a greatly enhanced Medicaid that you don't have to be poor to afford (and which no longer requires reems of paperwork)? What's the complication here? I know it ain't fixing a broken system, but rather putting on a patch ... but if you keep insuring more and more people with government funded health plans, the patch'll get bigger and bigger and slowly but surely turn into the single payer all true-blue moonbats say we need.

Nathanael do you know what a distortion is? It’s still a fact no matter how bad Medicaid is over 6 million poor people living below the poverty level qualify and yet don’t sign up.

This might shock your liberal ideology but not everyone lives in NY and suffer it’s high cost of living. What about the other 280 million Americans who can buy insurance for $3000 a year, we just toss them out of the equation? Who is distorting here?

DAS you managed to get that completely 100% wrong. I’m against UHC and very much anti liberal. Let me simplify it, responding specifically to Ezra and Krugman’s argument that people want health Insurance and just can’t afford it that is false, 20 million documented people have the means and choose not to. End of statement.

Look at Medicaid fraud on the 80s and 90s and you will understand the need for all that paperwork.

I'm a Californian transplanted to DC, and surprisingly at peace with it. Or at least I was till it started getting colder. Job-wise, I'm the staff writer for The American Prospect. In the past, I've written for the Washington Monthly, the LA Weekly, The LA Times, The New Republic, Slate, The New York Sun, and the Gadflyer. I'm a damn good cook. No, really. Want to know more? E-mail, I'm friendly.